Merchant Cash Advance Attorney for New Jersey Businesses

The case is in New York. The contract is still governed in part from here

A New Jersey business that takes a merchant cash advance almost always signs a document drafted for New York, and when the funder sues, that is where the papers come from. New York backs those clauses by statute only above figures most advances never reach — $250,000 for a choice of New York law under GOL § 5-1401, and $1,000,000 for the forum provision in § 5-1402 — so below them the clause stands or falls on ordinary forum-selection principles rather than on either statute.

That is the familiar half, and it is not the interesting half. New Jersey has legislated on merchant cash advances more directly than most states, and three of its statutes decide things a New York venue clause cannot touch.

New Jersey wrote a statute about confessions of judgment

Most states leave the confession of judgment to general contract law. New Jersey did not. N.J.S.A. 2A:16-9.1 provides that no provider of business financing shall extend business financing to a concern in this State that contains a judgment by confession — and the section defines its own terms. "Business financing" means a loan, line of credit, cash advance, factoring or asset-based transaction made for a business purpose. "Concern" is any trade, business or professional entity conducted for profit. "Judgment by confession" is a written agreement accepting liability and specifying damages where the business is in violation of the financing agreement.

Three sentences into a statute about business financing, the Legislature named the product. And subsection b. supplies the consequence: a provision of any business-financing contract providing for a judgment by confession that does not meet the section is invalid and unenforceable against any concern.

The section also requires that no judgment be entered on a warrant of attorney in any action on a bond or other instrument for the payment of money except on motion, after notice to the defendant served in lieu of summons under the court rules or by registered or certified mail. That sits alongside the older § 2A:16-9, under which no judgment by confession may be entered on a warrant of attorney included in the body of a bond, note or any instrument for the payment of money.

Enforcement of the 2019 section belongs to the Attorney General, who may bring a civil action and recover penalties rising from $5,000 to $15,000 per violation (§ 2A:16-9.2). What that machinery is worth to a particular business holding a particular contract is a conversation with counsel, not a conclusion a page can reach.

Usury: one statute closes a door, another opens a different one

New Jersey's civil usury rule is old and plain. Under § 31:1-1 nobody may take more than $6 per $100 a year, or $16 where there is a written contract specifying a rate — 6 and 16 percent. The same section then exempts loans of $50,000 or more from those limits entirely, and sets a separate ceiling for business or agricultural loans of $1,000 or more, pegged to the Federal Reserve Bank of New York discount rate plus five percent.

Then the door closes. § 31:1-6 is one sentence long: no corporation, limited liability company or limited liability partnership shall plead or set up the defense of usury to any action brought against it. Nearly every business that signs an advance is one of those three things, which means the civil usury defence is gone before the rate is discussed.

The criminal side draws its line somewhere else. § 2C:21-19 provides that, notwithstanding any New Jersey law permitting a rate the parties agree to, a rate above 30 percent a year is not authorised — except that where the borrower is a corporation, limited liability company or limited liability partnership, any rate not exceeding 50 percent a year is authorised. Above 50 percent it is a crime of the second degree.

So New Jersey law tells an LLC that it cannot plead usury, and separately sets 50 percent a year as the point past which the rate is not a permitted one. Both of those are in the statutes as written. What a defendant does with the distance between them depends on the agreement, on what was actually debited, and on whether the transaction is a loan at all — which is the question the purchase-of-receivables form exists to answer in the funder's favour.

When a New York judgment arrives in New Jersey

A judgment entered in New York is not self-executing here. New Jersey adopted the Uniform Enforcement of Foreign Judgments Act, and under § 2A:49A-27 an authenticated copy filed with the Clerk of the Superior Court is treated as a judgment of that court — with the same effect, and expressly subject to the same procedures, defenses and proceedings for reopening, vacating or staying.

§ 2A:49A-28 is the one to read with the papers in hand. The creditor must file an affidavit giving both parties' last known addresses and stating whether the time to appeal has expired and whether the court of origin granted a stay. Where the judgment was entered by default, the affidavit must say so, and must set out the expiration date under the origin court's rules for vacating that default. The clerk then mails notice of the filing. And no execution or other process may issue until fourteen days after the judgment is filed.

Most merchant cash advance judgments that arrive in New Jersey are New York defaults, which is why that paragraph matters more than its length suggests: it puts the deadline for attacking the underlying judgment on the face of the creditor's own filing, and it buys fourteen days before anything can be levied. Separately, § 2A:49A-29 requires the court to stay enforcement on a showing that an appeal is pending or will be taken, or that the origin court granted a stay, upon the security that state requires.

What can be collected here, and in what order

The instruments are not New York's. § 2A:17-1 directs the sheriff to make the debt out of the goods and chattels in the county first, and to reach real estate only for the residue if the goods are insufficient.

Wages are harder to reach than many merchants expect. A wage execution is not something a creditor simply serves: under § 2A:17-50 the creditor must apply to the court that entered the judgment, on notice to the judgment debtor unless the court orders otherwise, and satisfy the court by affidavit or otherwise — and only where wages, debts, earnings, salary, trust income or profits reach $48 or more a week. Even then, § 2A:17-56 caps the amount specified in the execution at 10 percent, unless the debtor's income exceeds 250 percent of the poverty level for a household of that size, in which case the court may order more.

A wage execution reaches a person, which on an advance means the owner who signed the personal guaranty rather than the company.

What to do first, from New Jersey

1. Read the caption before the complaint. Which court the case is in decides who can appear for you and how long you have. The firm is admitted in New York and New Jersey, so the answer does not change which office you call — but it changes everything about the schedule.
2. Find out whether a judgment already exists. An advance that went to a confession of judgment may have produced one without a lawsuit, and if it has been docketed here, the fourteen-day window and the default-vacatur date on the creditor's affidavit are the first two things to check.
3. Deal with what is already moving. A restrained account, a wage execution, or a levy on equipment each run on their own track and do not wait for the merits. A frozen account, a judgment entered without a lawsuit and a UCC filing are three separate problems with three separate clocks.

Most of these cases are brought in New York, which is where the firm defends them and where an MCA lawsuit is answered. Being admitted in New Jersey as well is what makes the second half of this page — the judgment, the levy, the wage execution — something the same lawyer can handle rather than refer.